A few weeks ago, I was interested in how U.S. tech journalists were dealing with the EU's finally imposing significant sanctions on digital 'gatekeeper' companies. In this debate, John Grubber, one of my long-time favorite American bloggers, discussing Apple, was seemingly outraged.
Two key points of John Grubber in his article called "The EU’s Share of Apple’s Global Revenue" were:
- The DMA allows the EC to fine gatekeepers like Apple up to 10-20% of global revenue, but it only applies to U.S. companies as there are no EU gatekeepers (Apple was fined $2 billion for hindering Spotify in the EU market).
- If the EU market contributes 25-30% of Apple's revenue, it's only 7% for the App Store, which could lead to Apple potentially exiting the EU market due to high fines.
Let's look into it.
First, it's quite telling that someone who is genuinely a subtle and well-documented analyst like John Grubber would read the EU gatekeeper notion as a form of anti-competitive practice designed to slow down U.S. companies. It's certainly interesting as the gatekeeper notion was precisely created to stop the anti-competitive lock-in that GAFAMs have secured in all markets besides China and... North Korea. The irony is that the U.S. themselves are starting to take a cue from the EU to deal with this abnormal situation in their own market (which I doubt will go very far as pushing in a new wave of American-first AI technologies will supersede any anti-competitiveness envy for a while).
The sense of entitlement and, to some extent, sheer blindness about what's wrong with the GAFAMs and other U.S. platforms is certainly astounding after more than 15 years of them stifling competition all across the board.
Then, there's a discussion about Apple's revenue in the EU, asking the question of when it will be better for Apple to just leave this market instead of incurring exponentially increasing sanctions when misbehaving. I'm not going to mention that John seems to have discovered that the U.K. is not indeed in Europe anymore–well, OK, I did–but where I'm quite surprised is that for him, having only 7% of the global App Store revenue in Europe could mean that Apple could leave it without hurting too much.
Apple is a platform, and by nature, all its revenues are locked in together. Again, this is at the heart of the issue. Apple could only have 2% of App Store revenue in the EU; it would still have 25-30% of hardware sales in the eurozone. What would be the option? The day Apple sells hardware without its proprietary services, Apple hardware sales drop 50% overnight! It's a rather silly discussion.
Not to mention that I still cannot compute the 7% of App Store revenue in Europe... This probably doesn't count any other cloud, streaming, or payment services, as the EU is a larger market than the U.S., with a much more widespread rich customer base (the U.S. is richer in GDP only with a poorer middle class and a huge tail of millionaires and billionaires).
In all this, there's certainly something we (Europeans) have to always keep in mind: even if their ways largely differ, the U.S. business culture is as aggressive against the EU as China. They will keep on pushing for anticompetitive behaviors as long as we allow them to do so and as long as we fight them country by country instead of building a proper European front–which, hopefully, we seem to end up doing more and more.
And if in doubt that we can rebalance these markets, remember last year's most important announcement:
Philippe MEDA